A Sports Magnate's New Toy

In Stan Kroenke, English Soccer Gets Another Foreign Owner at a Time When Big Spending Is Key

By

Jonathan Clegg And

Matthew Futterman

Updated April 12, 2011 12:01 a.m. ET

The biggest sports magnate in the U.S. has a new toy—a $1.2 billion English soccer team with a storied history but a recent dry spell that has begun to make its fans squirm.

Stan Kroenke, owner of a regional sports network and a franchise in every major North American sport except baseball, has secured a controlling stake in Arsenal Football Club, paving the way for a full takeover of the renowned English team, which was founded in 1886. Arsenal, known as the "Gunners," would join the NBA's Denver Nuggets, the NHL's Colorado Avalanche, the NFL's St. Louis Rams and Major League Soccer's Colorado Rapids in the Kroenke trophy case.

ENLARGE

Arsenal's Theo Walcott runs at the Blackburn Rovers defense during a Premier League game earlier this month.
Agence France-Presse/Getty Images

The deal also puts five of the top teams in the English Premier League—Manchester United, Chelsea, Manchester City and Liverpool are the others—into the hands of foreign owners, three of them Americans, at a time when international soccer has become the ultimate financial free-for-all.

Even as new rules aimed at reining in spending are set to come into effect in 2012, Kroenke's takeover shows that when it comes to winning, the deep-pocketed owner has become even more important for a team's hopes than a budding striker—a development not lost on even the staunchest British soccer supporter.

"As long as he gets us back on top, I don't care where he's from," Tariq Ahmed, an Arsenal season-ticket holder, said outside Arsenal's North London stadium on Monday. "Let's just hope he gives the manager a big pile of money to spend."

George Brown, a legal trainee and a member of an Arsenal fan group, added a little dig at Arsenal's porous defense this season. "If he signs a decent goalkeeper, he'll be all right by me," he said.

Kroenke gave few hints of his intentions Monday, limiting his comments to a statement that noted the club's distinct history and much-admired manager, Arsène Wenger. "We intend to build on this rich heritage and take the club to new success," Kroenke said in the statement.

Arsenal is the world's fifth-biggest soccer team by revenue, with $396 million during the 2009-10 season, according to Deloitte's Football Money League 2010 report. It's the second-richest club in England, behind Manchester United.

The big revenue and world-wide appeal of England's biggest teams have made them hot properties for the top owners in U.S. sports. Kroenke's acquisition comes after last week's announcement that LeBron James had formed a partnership with Fenway Sports Group to acquire a minority interest in Liverpool, the club that the owners of the Boston Red Sox purchased in October.

Kroenke is a 63-year-old Midwesterner who made his billions in real-estate development and who is married to Wal-Mart heir Ann Walton, whose father was the brother of company founder Sam Walton. But despite his vast holdings in the high-profile world of sports, Kroenke is the anti-Mark Cuban, an owner who rarely speaks out and does all he can to remain out of the public eye. In other words, don't expect to see Kroenke tweeting or as a contestant on "Dancing With the Stars" anytime soon.

"He's known for having really good managers and letting them do their jobs," said Rob Tilliss, principal of Inner Circle Sports, which advised Fenway Sports on its purchase of Liverpool.

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Stan Kroenke, with his son Josh, at a Denver Nuggets game in March.
Associated Press

Kroenke also appears to be shying away from overspending on glitzy stars. The Avalanche are one of the NHL's worst teams and had the league's fifth-lowest payroll this season, although they did win a Stanley Cup in 2001, shortly after Kroenke bought them.

The Nuggets, meanwhile, under the management of Kroenke's son, Josh, recently traded high-priced All-Stars Carmelo Anthony and Chauncey Billups to the New York Knicks for a collection of draft picks and seemingly unspectacular players. All the Nuggets have done since is post a better record than the Knicks since the trade and march to the fifth-best record in the NBA's Western Conference

"Stan is a smart guy," said Sal Galatioto, principal of Galatioto Sports Partners, a New York-based sports investment firm. "He runs these teams like a business."

While that approach may not sit well with Arsenal's supporters, it may be a good fit with Wenger. The manager since 1996, Wenger has transformed Arsenal from an efficient but dull and defensive-minded machine into the class of the Premier League for those who value deft, precision-passing and a dazzling attack.

Like the Spanish club Barcelona or Holland's Ajax, Arsenal under Wenger has become known for finding young talent and molding it into his intricate system rather than plunking down $100 million for an established superstar.

But the approach has left Arsenal without a major trophy since 2005. Arsenal, now second in the league behind Manchester United, has scored 62 goals this season, second-most in the EPL, but has allowed 30, more than third-place Chelsea and fourth-place Manchester City, leading many to question whether Wenger has become too wedded to a system that no longer works at the highest level. Some long for the days when Arsenal's lineup featured pickups from the transfer market like Charlie Nicholas, Thierry Henry or Dennis Bergkamp.

"This is a team that used to have an eye for the big-money talent," said Roger Bennett, author of the ESPN World Cup Companion. "Will Kroenke now put the liquidity in to buy the world-class goalkeeper or the $20 million proven defender?"

In a statement, Wenger said he welcomed the takeover and that Kroenke "understands the club's heritage and traditions and our ambition to run the club in a way which protects our long-term future."

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